Most people need to apply for financing when they purchase a big-ticket item such as a car or home.
When people apply for financing the one thing that will always be checked is the status of a person’s credit score.
According to Kutlwano Mogatusi, Communication Specialist at WesBank Motor, a person’s credit score is determined by their credit history and their ability to pay back loans on time.
John Manyike, Head of Financial Education at Old Mutual said, “It’s not overstating things to say that a good credit record and rating are the keys to your financial future.”
Salem Nyati, the founder of Debt Emancipation Movement, said that a good credit report is based on:
– a credit provider’s expectations of the borrower
– the financial behaviour of the borrower
– the impressions that the credit provider has of the borrower.
Here are four ways people can keep their credit rating up and their credit record clean:
Apply for credit too many times
Applying for credit or loans frequently is a sign that a person has financial challenges. The more a person applies for credit over a 12-month period, the more their name is listed.
Managing your credit card.
“If the balance on your credit card is kept well below your borrowing limit (preferably 35%), your score will benefit. Maxing your card out gives the impression that you are in financial trouble,” Nyati said.
High balances on credit accounts
A high balance on revolving credit accounts can lead to a high credit use rate instead have a low balance in relation to the available credit ratings which will allow you to maintain that good credit score.
Settle overdue accounts.
A late payment can stay on a person’s credit report for many years so make sure your accounts are paid up to date.
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